Fight-or-Flight for $15

Over the past few years, protests have been held by fast food/limited service restaurant employees fighting for the rights to not only earn a minimum wage, which the current federal wage is $7.25 an hour, but to earn what they consider a “living wage.” This is known as the “Fight for $15” or “Fast Food Forward” campaign. By definition, a living wage is a wage that is high enough to maintain a normal standard of living.

According to The Daily Caller, “supporters of the $15 minimum wage often argue it will help the poor and stimulate economic activity.” Many even mention former President Bill Clinton’s success with the minimum wage increase as an example, but what they don’t realize is that it was only a $0.90 increase across the nation in stages compared to what some cities and states will be experiencing at a $7 increase (Inquisitr.com).

Is More Really Better?

Last month, RestaurantNews.com released information on a study performed by Purdue University’s School of Hospitality and Tourism Management. The results of the study concluded that “raising wages to $15 an hour for limited-service restaurant employees would lead to an estimated 4.3% increase in prices at those restaurants.”

The study further states, “In order to compensate for higher wages, prices would have to increase between 4% and 25% and/or product size would have to be scaled back between 12% and 70%.” If you were complaining about prices and portion sizes now, then I would start to reconsider.

Another argument against a nationwide minimum wage hike is that not all cities and states should be treated the same. An article by Slate.com states, “In New York and San Francisco, $15 really translates to $12 and change, once you take cost of living into account. In Beckley, West Virginia, where cash stretches furthest, it’s worth $19.64.”

Cities and States

In spring 2014, Seattle voted for the $15 minimum wage increase with a proposal to increase the city’s minimum wage from $9.32 to $15 over the next few years. Recently, The Daily Caller stated that from an American Enterprise Institute (AEI) report, “the $15 minimum wage has caused Seattle restaurants to lose 1,000 jobs – the worst decline since the 2009 Great Recession.” The city only just increased the minimum wage to $11 in April 2015.

In November 2014, San Francisco workers voted for a minimum wage increase from $10.74 to $15 by 2018, and in May 2014, the city of Los Angeles lifted the minimum wages from $9 to $15 by 2020. According to Slate.com, workers will be earning $10.50 per hour starting next year. Now, it’s the state of New York’s turn.

A Plea from the Restaurant Industry

Since NY’s acting labor commissioner, Mario Musolino, formed a wage board to recommend new minimum wage requirements without any restaurant operators or restaurant industry professionals from the National Restaurant Association (NRA) or New York State Restaurant Association (NYSRA), the restaurant industry in NY immediately became unhinged. How can a three member board make drastic decisions without the input of the professionals who work within the restaurant industry?

On August 7th, Nation’s Restaurant News (NRN) released an article encouraging its readers to “tell New York’s labor commissioner to reject a $15 minimum wage for fast-food-employers.” The article continues to state that the Save New York Restaurants coalition, which includes the NRA and NYSRA, is urging all restaurant operators to speak up about the “pressure a $15 minimum wage will put on their businesses and the unfairness of targeting a single industry.”

Additionally, the Fast Food Wage Board filed its report, which includes the list of 137 brands that have been targeted for the $15 minimum wage increase, with NY’s Department of Labor. The list is “not an exclusive or final list” of 137 brands that have been loosely defined as fast food establishments with 30 or more locations nationwide as of 2014. (Download the list here.)

Due to the wide variety of restaurants on the list, NRN’s article stated that the “board intended to cast a wide net” over these loosely defined “fast-food” establishments, which included brands like Chipotle, California Pizza Kitchen, Five Guys, Chuck E. Cheese’s, Papa John’s, and Buffalo Wild Wings. Proving the wide net theory to be true, Chain Store Guide’s definition of fast food/quick service does not include brands like Buffalo Wild Wings, California Pizza Kitchen, and Chuck E. Cheese’s, but rather files them under the casual dining sector. These locations may have a somewhat limited menu, but that’s a far cry from considering them “fast-food.”

What’s Going to Happen Next?

As cities and states continue disputes about the minimum wage hike, companies across the U.S. are scrambling to find solutions of their own. New York-based Shake Shack announced that the company is raising its minimum wage pay at its four Washington D.C. restaurants to $12 an hour. In order to stay ahead of the minimum wage increase, Shake Shack has been able to raise “menu prices 6 percent in recent quarters” (NRN).

Another company whose name is in a headline at least once a week is McDonald’s. The rumor mill stated, in a recent Inquisitr.com article, that McDonald’s “is countering the mandating of a $15 minimum wage” increase by “flirting with the idea of automatic cashier machines, similar to the automatic check-out machines found in some grocery and retail stores such as Walmart.” (If you haven’t seen the company’s newest machine, you can check it out here.) Making a point that no one can disagree with, the article continues to state that “a machine will never ask for an increase to a living wage – or any wage, for that matter.” Although the rumors have not been verified as true, it’s hard to not think this could be a possibility in the future.

Loren joined Chain Store Guide July 2014 as a Market Research Editor. She graduated from the University of South Florida with a Bachelor of Arts in English for Technical Writing with a minor in Mathematics. Loren brings six years of restaurant industry experience to Chain Store Guide.